The Hongkong Bank Group, which holds the majority of HSBC Holdings' Asian operations, said yesterday attributable profit rose 16 per cent to $19.25 billion last year, just about in line with analysts' forecasts. The company said the profit growth was due to rising income from loans and efforts to expand operations in the rest of Asia. Operating profit before provisions increased 18 per cent to $26.93 billion, while assets increased 10 per cent to $1.29 trillion. Net interest income rose $4.8 billion, or 19 per cent. The group's capital ratio rose to 15.4 per cent from 15.1 per cent, while tier one capital ratio rose to 9.8 per cent from 9.4 per cent. On the downside, provisions for bad and doubtful debts more than doubled, rising from $647 million to $1.44 billion. Hongkong Bank chairman John Strickland said: 'Our business in Hong Kong made good progress in the face of intense competition.' He said initiatives to expand the group's operations across the region resulted in significantly better returns in Australia, Indonesia, New Zealand, China and the Philippines. The bank's advances-to-deposits ratio rose slightly to 62.6 per cent, from 62.5 per cent at the end of 1995. Average deposits grew 9 per cent to $78 billion, with current and savings accounts increasing at a faster rate than higher interest rate bearing time deposits. Directors said Hong Kong residential mortgage lending across the group as a whole, grew 6.33 per cent, slowed by the mortgage war. David Eldon, Hongkong Bank's chief executive, said: 'The mortgage war - as it has been called - is a fact of life and we are in this business to compete.' Analysts were positive about the results, and said they remained optimistic about the group's future. Andrew Brown, head of financial institutions research for Asia at Salomon Brothers, said: 'The results are in line with our expectations. There are some very strong underlying trends. 'One of the strengths was the expansion of the net interest margin - that was a very pleasant piece of the pie.' The increase in the provision for bad and doubtful debts was of no great concern, analysts said. A substantial proportion of the provision was supposed to be due to just one or two trading accounts. Roland Bruce, an analyst at Nava SC Securities, said: 'My initial reactions would be positive. 'The amount of the provisions should not be a surprise to anybody. 'It was pretty well publicised. Now it should be out of the way.' Mr Strickland said while the bank could not expect to repeat such a high rate of growth every year, the outlook for this year was encouraging. 'Although we expect slightly slower rates of growth in some of the more mature Asian economies, the region will still outpace most of the rest of the world, bringing new business opportunities,' he said.